The Starting Point

from channeling reality.com
by Vicky Davis
May 7, 2010

Yesterday as I was listening to the U.S. Senate debate the financial reform legislation pertaining to Consumer Protection, it seemed to me that the Senators were more like squabbling juveniles than statesmen.  But both sides did make good points for why the other side's proposal was bad.  And they were right.  Both proposals are bad.   

The Republicans wanted a Consumer Protection section added to the FDIC.  Obviously, the FDIC doesn't have authority over all financial institutions in which a Consumer might need regulatory protection so the Republican solution is inadequate.  

The Democrat's proposal put the Consumer Protection function under the control of the Federal Reserve with no reporting requirements and no oversight by Congress - and no funding from Congress.  The Federal Reserve had regulatory authority over mortgage lending but they chose not to exercise it.  The Federal Reserve is charged with the responsibility to ensure full employment and control of inflation.  Under Alan Greenspan's watch, they redefined inflation to mean rises in workers wages and he recommended to Congress that they flood our labor market with imported workers while the major corporations were exporting high dollar jobs to India.  Apparently, Greenspan expanded his mandate for full employment to mean the entire world - rather than just the United States.  It was Greenspan's philosophy of self-regulation for financial institutions, the redefinition of inflation and his recommendations to Congress that led to the meltdown of our economy and now the Democrats want to give them regulatory authority to "protect" us?  Really?
They also discussed the size of the banks and the consolidation in the banking industry after the repeal of Glass-Stegell.  In the 1990's, the banks apparently argued that they need the repeal so that they could compete with European banks.  One of the banks apparently is now a $2 trillion bank.  I believe one of the Senators said that the top 5 banks represent 63% of our GDP.  That is in incredible statistic. Part of the discussion was "Too big to fail" and "To big to live"  but I didn't hear "Too big to audit" which is really a significant consideration that they aren't even discussing.  And where is the benefit to the American people and our country in having banks that much control over the economy? According to a report by the Federal Reserve, there is no benefit in terms of economies of sale for banks over $100 billion. 
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